Reproduced with permission by Energy Intelligence for Eurelectric
Issue Vol. 5, No. 41, October 13, 2016
Energy
Intelligence
Vol. 5, No. 41
October 13, 2016
Special Reprint of EI New Energy for Eurelectric. Copyright © 2016 Energy Intelligence.
Unauthorized access or electronic forwarding, even for internal use, is prohibited.
New, Unexpected Players Enter Power Sector
Power is undergoing a transformation, opening the door to fresh
faces. New players include telecom firms, retail ventures, automakers and may even expand to oil companies, a trend that is
stealing influence from utilities. This transformation is occurring because power, after a slow start, is now knee-deep in its
digital revolution as decentralized generation expands and consumers are turning into “prosumers,” generating and selling
their own electricity, speakers told a conference on the customer-focused energy business hosted by industry group Eurelectric
in Brussels last week (NE Sep.8’16). New players are popping
up, such as Uber-like peer-to-peer platforms connecting prosumers, “big data” services, and suppliers of “smart” devices —
including storage. Even oil companies have some room get
involved, although the fit isn’t quite natural. In any case, the
influx of new tools and players is helping consumers take better
control of their energy consumption and costs.
Print
Utilities retain unique skills and competitive advantages,
notably in customer relationships, but this may change rapidly,
consultancy Poyry’s Stephen Woodhouse warned. Other sectors
have good customer management capabilities too, including
telecom and retail. “Supermarkets already sell electricity in
Australia and other places,” he said, while telecom firm
Swisscom provides a service linking residential heating devices
in a virtual network that can react to grid fluctuations — for
example by delaying usage of some devices. Similarly Tesla is
“cherry-picking” promising energy customers by offering free
electricity to its “supercharger” users (NE Jul.28’16). By contrast, oil companies — although part of their expertise, such as
risk management, is also relevant to electricity — are culturally
very far from electricity end users and it would take “some
courage” for them to learn the appropriate skills and enter the
transitioning power sector, Eurelectric Secretary General Hans
ten Berge told EI New Energy.
Web
Renewables are one of the main forces behind the digitalization of grids. This is not only because intermittent wind and
solar create special grid management issues, but also because
renewable power generators are now in the millions and need
real-time coordinating tools, Next Kraftwerke’s Helen Steiniger
told the Brussels conference. She mentioned Germany, which
now hosts some 1.5 million power plants mostly owned by individuals, up from just 1,000 or so large plants in the hands of the
utilities and very few smaller ones 15 years ago. Next
Kraftewerke, which started operations in 2009 and calls itself a
“digital utility” or “virtual power plant” operator, is currently
networking some 2,000 megawatts of capacity in five European
countries. “We are a platform for connecting independent producers and consumers to grid operators and markets,” Steiniger
said. It allows rarely used hospital emergency generators to sell
grid support services, private solar photovoltaic plants to operate in the day-ahead wholesale power market, and owners of
electric vehicle fleets to take advantage of power price fluctuations to optimize charging costs, she mentioned as examples.
Lumeneza, another German start-up that calls itself a “utility
in a box,” offers similar services. “We buy electricity directly
from producers and sell it to consumers with full control over
tariffs on both ends; we can control millions of different devices
that either generate or store energy and do all the balancing,”
said CEO Christian Chudoba. EnBW, Germany’s third-largest
utility, is a strategic investor in Lumeneza through its €100 million ($110 million) venture capital fund (NE Mar.24’16). “We
currently run eight start-ups dealing with smart city solutions,
big data solution and virtual power plants,” said Michael Bez of
EnBW’s innovation department.
Belgium-based REstore is another example of an “aggregator,” focusing on industrial consumers. It is often possible to
shift power consumption over time without much impact on
operations, co-founder Jan-Willem Rombouts told the Brussels
conference. “We contract flexible demand from industrial power
consumers, we aggregate those volumes through our cloud platform and we offer that in the reserve markets across Europe,”
he explained. Instead of producing power, REstore can help
secure grid reliability by adjusting consumption of its 1,500
MW currently under management. This generates revenue,
which is shared with customers.
Those customers include French oil major Total, Rombouts
told EI New Energy, adding the company could one day turn
from a customer to an investor since REstore fits with Total’s
recent focus on electricity. Total’s new gas, renewable and power
unit, which includes solar panel manufacturer SunPower and
battery-maker Saft, aims to provide electricity “solutions”
including plain energy supply from the grid together with decentralized generation, storage, energy efficiency services — and,
potentially, energy management services such as those offered by
Next Kraftwerke, Lumeneza and REstore (NE Sep.29’16).
(continued on page 2)
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Special reprint of EI New Energy Vol. 5, No. 41, October 13, 2016 for Eurelectric
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(continued from page 2)
Strong financial skills will continue to be needed in the
power transition. Because electricity is “the most volatile commodity in the world,” Woodhouse said, players in the power
sector need to make sure they find ways to manage cash
flows, collateral and debt even if they don’t own a lot of hard
assets. The “ability to invest in a 40-year [electric generation]
asset on the back of a series of one month customer contracts”
involves risks that “deter many people from entering the sector,” he said. It also requires a big enough balance sheet,
which is likely to keep asset-light companies away from “really big energy supply contracts.”
Philippe Roos, Brussels
Reproduced from EI New Energy with permission from the publisher, Energy Intelligence for Eurelectric. Photocopying of EI New Energy, even for internal
distribution, is strictly prohibited. www.energyintel.com. © Copyright 2016 Energy Intelligence. For information about subscribing to EI New Energy
or other Energy Intelligence publications and services, please visit our website: www.energyintel.com or call (+1) 212-532-1112.